Representatives of PAAPAM (Pakistan Association of Automotive Parts and Accessories Manufactures) met with Khizar Hayat Gondal who is the Federal Secretary Industries discussing the concerns over the new Pakistan Auto Policy 2016-21.
The PAAPAM delegation was being headed by the Chairman Engr Mumshad Ali along with former chairman Mohammad Saleem and Senior Vice Chairman Mashood Ali Khan. Chief Executive Officer of Engineering Development Board (EDB) was also present at the meeting.
The main purpose of the meeting was to bring the concerns of auto parts manufacturers to the attention of the concerned governmental office bearers. The delegation expressed association’s apprehension regarding the status of new entrants to MTW under the auto policy that had terminated on the 1st of July, 2016. The delegation gave the example of tractor industry that has already been neglected and hurt by the erratic policies. The industry is already performing under capacity mainly because of the irregular subsidies and fluctuating GST trend. Besides, the agricultural industry is already in trouble that has further brought decline to the demand of new tractors and tractor parts.
Other than that, the representatives also discussed the impact of regulatory duty on steel products with the Federal Secretory. The duty has increased the raw material costs for the auto part makers. The delegation further said in a statement,
“In certain cases, the duty impact on steel raw material is up to 50 percent, and this regulatory duty is against the cascading principal of duties in the auto policy which levies minimum duty on raw material,”
The threat imported used cars impose to the potential entrance of new automakers also became one of the points of discussion. Currently, the cars can be imported through baggage, TR, and gift schemes. Just last year, Volkswagen and Fiat were meeting with Pakistani officials discussing the possibility to enter Pakistani auto sector, but the leeway provided to third-party used car importers is acting as a deterrent. The delegation made it clear that under current scenarios, the chances of new carmakers coming to Pakistan are almost nonexistent. It was proposed that the government should reduce the GST on small cars that are being assembled in Pakistan and gradually reduce the age limit of used cars to discourage the imports attracting new foreign investments.
The Secretary was swift to instruct his staff to come up with solutions to the issues raised in the meeting. But how far can his efforts go in helping the Pakistani auto part makers and vendors, that has yet to be seen. Our auto industry and auto sector, on the whole, has a long way to go.